The FBR issued SRO 996(I)/2018 to amend SRO 1125(I)/2011 to allow zero percent sales tax on import of machinery, not manufactured locally if imported by textile industrial units registered with the Division to which business of the textile industry stands allocated and as specified in Part IV of the Fifth Schedule to the Customs Act, 1969, subject to the same conditions as specified therein.
The sales tax zero-rating to textile sector under Prime Minister relief package through SRO 36(I)/2017 to boost the country’s exports. However, the notification had expired on June 30, 2018 and the facility is no more available to the export sector.
The ministry of commerce requested the federal government to extend the facility beyond June 30, 2018. The FBR, however, explained that through Finance Act, 2018 the law had been amended and from July 01, 2018 only the federal government could make such decisions.

It further said that the federal government in the law had been defined as the federal cabinet, including the prime minister, which was held by Supreme Court of Pakistan in a case challenging the powers of minister incharge.
Therefore, the FBR requested the ministry of commerce and textile to obtain and provide approval of the federal cabinet for issuance of fresh notification for zero-rating of sales tax on textile machinery mentioned in SRO 36(I)/2017.
As a temporary arrangement, the FBR directed the customs authorities that textile machinery qualifying for concession of sales tax may be cleared provisionally under Section 81 of the Customs Act, 1969 by allowing zero rating of sales tax on such imports.
However, with the issuance of instant SRO 996(I)/2018 the FBR removed lacuna in the law and allowed the zero-rate sales tax on import of textile machinery.

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